Nut grower ekes small
gain from insurance

ML Macadamia Orchards LP, the state's largest nut grower, swung to a small gain in the second quarter after receiving a $147,000 crop insurance settlement because it had a low harvest.

The Big Island company had a net profit of $26,000, or zero per Class A unit, compared with a loss of $161,000, or 2 cents per unit, in the year-earlier period.

Revenue in the quarter, which marked the end of the harvest season, jumped 90.7 percent to $1.5 million from $787,000 because different weather patterns affected the timing of the harvest, the company said.

Chief Financial Officer Wayne Roumagoux said the ML Macadamia received the crop insurance payment because its Keeau harvest didn't reach a 10-year average last season.

ML Macadamia said the second quarter is usually one of the year's lowest harvest periods and accounts for less than 4 percent of the year's total harvest. But the late harvest helped the company nearly triple its macadamia nut sales in the quarter to $456,000 from $153,000, and boosted contract farming revenue 64.8 percent to just more than $1 million from $634,000.

Roumagoux said the company received roughly 53.5 cents a pound for wet-in-shell nuts during the quarter because of its contract with the exclusive buyer, Hershey Co. Last December, Hershey bought Mauna Loa Macadamia Nut Corp., which held the rights to be the exclusive purchaser of all of ML Macadamia's nuts.

ML Macadamia, unhappy that it is getting paid far below the macadamia market price of more than 90 cents a pound, has been negotiating for a better contract with Hershey for 9 million pounds of nuts that will become available to be purchased by any buyer in 2007.

ML Macadamia has a complex pricing arrangement based half on the current year processing and marketing results of Hershey -- previously Mauna Loa -- and half on the two-year trailing average of U.S. Department of Agriculture macadamia nut prices.